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BCBS of Michigan Again Offers $30M in Antitrust Settlement

Oct. 12 — Blue Cross Blue Shield of Michigan has again offered $30 million to settle antitrust
claims against it for the way that it structured its contracts with health-care providers
in Michigan (
Shane Grp., Inc. v. Blue Cross Blue Shield of Mich, E.D. Mich., No. 2:10-cv-14360, proposed settlement
10/11/16
).

This is the second time the insurer has offered that amount to cover the $118 million
in damages alleged by about 3 million to 7 million purchasers of health-care services
in the state. The U.S. Court of Appeals for the Sixth Circuit sent the original settlement
back to the district court in June,
finding the court hadn’t permitted objectors sufficient access to the court filings to make
a proper objection to the settlement (110 HCDR, 6/8/16).

Walters, the attorney for the class members who objected to the original settlement,
said his clients intended to object again to the newly proposed settlement.

Representatives from BCBSM declined Bloomberg BNA's requests for comment. However,
in the motion for settlement approval, class counsel told the court that “nothing
has changed that would warrant the court reversing its conclusion two years ago that
the settlement is a fair, reasonable, and adequate resolution of plaintiffs’ claims.”

Nearly Identical Settlement

The new settlement agreement includes nearly identical terms to the agreement that
Judge Denise Page Hood of the U.S. District Court for the Eastern District of Michigan
approved in March 2015.

The class members' motion for preliminary approval of the new settlement asserted
the Sixth Circuit's reversal wasn't based on a rejection of the actual terms of the
settlement but instead was based on the way that the court administratively handled
the approval process.

The motion also noted the parties have worked hard to obtain consent from third parties
to publicly file their previously sealed documents and their expectation that “before
notice of the settlement is disseminated, much or all of the remainder will be unsealed
by consent or court order.”

However, Walters expressed doubts about whether the new settlement conformed to the
Sixth Circuit's opinion.

“One of the reasons the Sixth Circuit rejected the original settlement was because
the entire process was shrouded in secrecy,” he said. “Now the plaintiffs and BCBSM
propose the same settlement that was rejected by the Sixth Circuit without sharing
a single new piece of information.”

Most-Favored-Nation Clauses

The case involves the use by BCBSM of “most-favored-nation”
clauses in its provider agreements. Under those provisions, BCBSM allegedly agreed
to pay hospitals high rates as long as those same hospitals charged the same or even
higher rates to the commercial health insurers that were competitors of BCBSM.

An earlier settlement attempt by the insurer and representatives for the class members
garnered an objection from 26 self-insured companies who claimed the settlement wasn't
fair because it included attorney fee agreements that resulted in the class members
receiving only a fraction of their alleged damages. Additionally, the objectors claimed
the district court had improperly sealed all the relevant court filings, which prevented
them from effectively challenging the full settlement agreement.

After the Sixth Circuit's remand, Judge Hood again refused to allow the objectors
to intervene and become separate parties to the case.

However, the judge did order the parties to include the objectors and to begin the
process of unsealing the court filings, in anticipation of an amended settlement agreement.

The class is represented by Cohen, Milstein, Sellers & Toll in Washington, Fink +
Associates Law in Bloomfield Hills, Mich., Gustafson Gluek PLLC in Minneapolis and
the Miller Law Firm in Rochester, Mich.

BCBSM is represented by Hunton & Williams LLP in Washington, Dickinson Wright in Detroit
and Bodman PLC in Detroit.

The objectors are represented by Varnum in Grand Rapids, Mich.

To contact the reporter on this story: Matthew Loughran in Washington at
mloughran@bna.com

To contact the editor responsible for this story: Peyton M. Sturges at
psturges@bna.com

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